As you move along in life you will face many decisions along the way. You can choose to move forward on one path or another.
You can decide to turn around and change direction, or you can choose to do nothing, and stay in place.
There are risks, plus the fear of the unknown, which paralyzes some of us. Many times this leads to indecision and procrastination.
Doing nothing is a decision! This applies to your financial life and investment choices as well.
I recall a tenant of mine who had a six figure income in Silicon Valley. I always wondered why he was renting and had not purchased his own property.
After many years of real estate fluctuations and cycles he still had not purchased and I asked him why not.
I confirmed that when the real estate market was strong (and prices were up) he was fearful of ‘buying too high’ and overpaying so he did not buy.
When the real estate market had come down (and prices dropped) he was fearful that the market would continue to drop and he would lose money so he ended up doing nothing!
Unfortunately for him, he missed out on building his wealth and net worth via home ownership, enjoying the tax benefits of owning real estate, while paying a predictable mortgage rather than the uncertainty of future rent increases or eviction. Now you may argue that he may have made a conscious decision to rent because he did not want to plant roots in Silicon Valley or had job ‘insecurity’ which may be the case. The reality was he rented in the community for well over a dozen years while the Silicon Valley real estate prices and rents exploded. Most average single family homes in the Bay Area are worth $1 million or more!
The fear of risk and making a mistake cost him dearly by ‘doing nothing’! ‘Pulling the trigger’ is the most difficult decision.
You may prefer a guaranteed outcome but that comes with it’s own risks such as low interest rates, inflation risk or the opportunity cost of missing out on gains.
There are so many financial paths and decisions that each of us face in our daily lives. Each decision may seem insignificant but they accrue and do effect the big picture, which is your life, your financial life and your future life. It is important to pay attention to the paths, your choices, and your decisions.
Neglecting them may be hazardous to your health and wealth.